HSBC analysts say they do not expect any other sharp selloff in metals after the plunge at the beginning of the week.
"The severity and concentration of recent selling was unusually strong
and we do not expect a repeat," the bank says.
Moreover, there is a possibility that emerging-market demand may rise, and "we note that
silver — a smaller thinner market – managed to pare the bulk of its
losses (Monday) and traded positively for part of the session."
Another relatively small market - palladium - "cut the bulk of its early
losses and clambered back over USD600/oz. Were the gold decline a full
bullion-wide cascade lower and the beginning of another major move
lower, we do not think these other precious metals markets would have
recouped as much of their early losses as they did."
Thus, commodity analysts at the bank suggest "the possibility that the PGMs (platinum group metals) and silver may bounce on short covering. This could trigger a similar move up in gold. It is our view that the PGMs and silver are also oversold.”
